TUMEN, July 22 (RIA Novosti, Alexander Perestoronin) - The Russian economy's "Petroleum frame" needs to be overhauled, the Federation Council Speaker, Sergei Mironov, said here Friday. Mironov is currently in the administrative center of the Khanty-Mansiisk autonomous district in western Siberia, to meet with executives and workers from Yuganskneftegaz, formerly Yukos' main production unit.
Mironov said the oil industry is a top source of the country's energy security, financial stability and social development. Russia leads along with Saudi Arabia in terms of oil production and takes second place in terms of oil-refining capacity, following the United States.
Mironov said oil production growth in Russia has slowed down since earlier this year.
"It has immediately affected the economy in general. Although the growth dynamics are positive, GDP growth contracted from 7.1 % to 5.6 %."
Mironov said the problem is that the Russian economy is highly dependent on the situation in the gasoline sector, affected by some serious problems, regardless of the favorable conditions on the world market. He said given current trends, the oil industry could go from a major positive economic factor to the main reason for an economic drag.
"The price of oil on the internal market has grown dramatically. It has affected other sectors and resulted in inflation growth," Mironov said, adding that big business does not intend to invest on a large scale in oil production. "Excessive oil revenues do not contribute to the modernization of the gasoline sector and the economy in general."
According to the Russian energy strategy for 2020, annual investment in oil production should amount to $24 billion, but it has not even reached half of the target amount now.
"A limiting factor that contributes to that is legal instability [and] the poor tax incentives imposed by many countries," Mironov said.
Mironov said the government should develop a clear and appropriate system of legal guaranties and tax incentives to attract investments into all stages of oil production, including geological exploration.
"And it is no less important to guarantee the stability and predictability of the game's rules," Mironov said.
